SINGAPORE (June 6): Straits Real Estate, a subsidiary of Straits Trading Company, is investing roughly A$119 million (S$122.7 million) for a stake in a 32-storey office building located at 320 Pitt Street in Sydney, Australia.

320 Pitt Street is a 32-storey office building with a total net lettable area of 29,159 square metres. It is within walking distance from Central Rail Station, and the upcoming George Street light rail system and Pitt Street Metro station. It is also located within close proximity to Chinatown and Pitt Street Mall.

The office building — which was built in 1989 and underwent upgrades to mechanical and hydraulic systems in 2010 and lift cars in 2016 — has a total net lettable area (NLA) of 29,159 sq m.

In the acquisition, Straits Real Estate, through its subsidiary, SRE Australia 2, subscribed for a 26% interest in the unit capital of 320P Trust and A$119 million of notes issued by 320P Trust.

As part of the deal, SRE Australia 2 will be part of a consortium comprising funds managed by ARA Asset Management to acquire the said office building, through a sale and purchase agreement with Propertylink Fund Management as the property’s trustee.

“The investment in 320 Pitt Street is very much aligned with Straits Real Estate’s strategy of redeploying capital into potentially higher return real estate opportunities. We see value in this property, as it gives us a healthy stream of income via the building’s existing leases,” says Desmond Tang, CEO of Straits Real Estate.

“Beyond that, we also see its potential to be repositioned as a core investment through an asset enhancement programme similar to 114 William Street, which we successfully divested last November, shortly after its enhancement initiatives. This shows that our strategy of seeking out investments that offer immediate cashflow and value-adding proposition works,” he adds.

Shares of Straits Trading closed 4 Singaporean cents lower at S$2.51 on Tuesday.